Second tranche of Bharat Bond ETF to open on July 14, aims to raise Rs 14,000 crore

The second tranche of Bharat Bond ETF will open for subscription on July 14, with a base issue size of Rs 3,000 crore.

The Bharat Bond ETF program is an initiative of the government from the Department of Investment and Public Asset Management and the latter has given the mandate to Edelweiss AMC to design and manage the product.

Edelweiss Asset Management today announced the launch of the second tranche of Bharat Bond ETF, with two new series, after the successful launch of the initial series of exchange traded funds (ETFs) in December 2019.

"The two new Bharat Bond ETF series will have maturities of April 2025 and April 2031 (i.e. Bharat Bond ETF April 2025 and Bharat Bond ETF April 2031. The new fund offer (NFO) will start from July 14 and end on July 17, 2020," Edelweiss said in its statement.

With this Bharat Bond ETFs will have four maturity points on the yield curve – 2023, 2025, 2030 and 2031, Radhika Gupta, CEO at Edelweiss Mutual Fund said, adding in future they would launch more ETFs and fill the remaining maturities.

Edelweiss Mutual Fund aims to raise upto Rs 14,000 crore through the second tranche of Bharat Bond ETF.

"Through the launch of these two new ETF series, Edelweiss Mutual Fund proposes to raise an initial amount of Rs 2,000 crore with a green shoe option of Rs 6,000 crore in 2025 maturity; and initial amount of Rs 1,000 crore with a green shoe option of Rs 5,000 crore in 2031 maturity based on market demand," it said.

Tuhin Kanta Pandey, Secretary of DIPAM, Ministry of Finance said, "Bharat Bond ETF program has provided easy access to investors into bond markets and adequate liquidity on exchange with low bid-ask spreads, this will encourage investor participation and help in developing bond markets further."

"In upcoming issue, we expect to raise anywhere between Rs 3,000 crore to Rs 14,000 crore. This will help CPSEs in their capex programs in coming months," he added.

The ETF will invest in constituents of the Nifty Bharat Bond Indices, consisting of AAA rated public sector companies. "Bharat Bond Fund of Funds (FOF) with similar maturities will also be launched for investors, who do not have demat accounts," said Edelweiss.

The 25 percent of portion of Bharat Bond ETF is reserved for retail investors, and the rest 75 percent is for retirement funds, QIBs and non-institutional investors.

"We hope that the Bharat Bond ETF program achieves its ultimate objective of creating a liquid yield curve for CPSE bonds and helps further agenda of development of bond markets," Rashesh Shah, Chairman & CEO at Edelweiss group said.